In the past several decades, pension plans have become one of the most significant institutional influences on labor and financial markets in the U.S. In an effort to understand the economic effects of this growth, the National Bureau of Economic Research embarked on a major research project in 1980. Issues in Pension Economics , the third in a series of four projected volumes to result from thsi study, covers a broad range of pension issues and utilizes new and richer data sources than have been previously available. The papers in this volume cover such issues as the interaction of pension-funding decisions and corporate finances; the role of pensions in providing adequate and secure retirement income, including the integration of pension plans with social security and significant drops in the U.S. saving rate; and the incentive effects of pension plans on labor market behavior and the implications of plans on labor market behavior and the implications of plans for different demographic groups. Issues in Pension Economics offers important empirical studies and makes valuable theoretical contributions to current thinking in an area that will most likely continue to be a source of controversy and debate for some time to come. The volume should prove useful to academics and policymakers, as well as to members of the business and labor communities.
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This Page Intentionally Left Blank Issues in Pension Economics A National Bureau of Economic Research Project Report Issues in Pension Economics Edited by zvi Bodie, John B . Shoven, and David A. Wise The University of Chicago Press Chicago and London Zvi Bodie is professor of finance at Boston University. John B. Shoven is professor of economics at Stanford University. David A. Wise is the John F. Stambaugh Professor of Political Economy at the John F. Kennedy School of Government, Harvard University. The University of Chicago Press, Chicago 60637 The University of Chicago Press, Ltd., London 0 1987 by The National Bureau of Economic Research All rights reserved. Published 1987 Printed in the United States of America 96 95 94 93 92 91 90 89 88 87 5 4 3 2 1 Library of Congress Cataloging in Publication Data Issues in pension economic? (A National Bureau of Economic Research project report) Bibliography: p. Includes indexes. I . Pension trusts-United States-Congresses. 2. Corporations-United States-Finance-Congresses 3. Pensions-United States-Finance-Congresses. 1. Bodie, Zvi. 11. Shoven, John B. 111. Wise. David A . IV. Series. HD7105.45.lJ6162 1987 331.25’2’0973 86-19346 ISBN 0-226-06284-8 National Bureau of Economic Research Officers Franklin A. Lindsay, chairman Richard N. Rosett, vice-chairman Martin Feldstein, president Geoffrey Carliner, executive director Charles A. Walworth, treasurer Sam Parker, director uf3nunce and administrution Directors at Large Moses Abramovitz Andrew Brimmer Carl F. Christ George T. Conklin, Jr. Jean A. Crockett Morton Ehrlich Martin Feldstein Edward L. Ginzton David L. Grove George Hatsopoulos Walter W. Heller Saul B. Klaman Franklin A. Lindsay Roy E. Moor Geoffrey H. Moore Michael H. Moskow James J. O’Leary Robert Parry Reter G. Peterson Robert V. Roosa Richard N. Rosett Bert Seidrnan Eli Shapiro Stephen Stamas Donald S. Wasserman Manna v.N. Whitman Directors by University Appointment Marcus Alexis, Northwestern Albert Ando, Pennsylvania Charles H. Berry, Princeton James Duesenberry, Harvard Ann F. Friedlaender, Massachusetts Institute of Technology J. C. LaForce, California, Los Angeles Paul McCracken, Michigan James L. Pierce, California, Berkeley Nathan Rosenberg, Stanford James Sirnler, Minnesota James Tobin, Yale John Vernon, Duke William S. Vickrey, Columbia Bur